Tuesday, May 20, 2008

“[The B.C. government] have listened very carefully to what we have asked for and we’re satisfied almost everything we’ve said needs to be done to become competitive, they’ve moved ahead on.”– Greg Stringham, vice-president of markets and regulatory affairs Canadian Association of Petroleum Producers (CAPP), Calgary Herald, June 7, 2004

“We were pleased Premier Wall and Minister Boyd were able to meet with us so early in their new mandate…It’s clear that the Government of Saskatchewan is interested in the long-term growth and stability of the oil and gas industry in the province.”– CAPP President Pierre Alvarez in a Jan. 23, 2008, Government of Saskatchewan news release following private meetings with the new Wall government in Calgary

“It was important to the industry that there aren’t any plans to do a royalty review.”– David Pryce, vice-president of Western Canada operations for CAPP, following Premier Wall’s promise to the oil and gas industry in Calgary that royalties would not be increasing under his government in Saskatchewan, StarPhoenix, Jan. 24, 2008

On Apr. 14, the Saskatchewan Party government accused NDP members of opposing labour bills because several unions had donated cash to their election campaigns.

The government claimed unions contributed about $281,000 to various NDP campaigns during the 2007 provincial election.

“I think it begs the question, especially on essential services or on the trade union act amendments, for whom is the (NDP) opposition speaking?” said Premier Brad Wall.

Wall said corporate donations the Saskatchewan Party receives each year do not have an influence on his government’s positions.

On Apr. 15, Sask. Party MLA Tim McMillan stood in the legislature to read a member’s statement, in which he said "there are “281,000 reasons” the NDP is criticizing the labour legislation.

“They are puppets doing the bidding for their union masters,” McMillan charged.

Wall failed to mention that records filed with Elections Saskatchewan show that Saskatchewan Party candidates reported nearly $650,000 in corporate donations during the same campaign – nearly matching the $668,016 in corporate money that the party received in 2006.

Wall also neglected to mention that employees likely don’t have a say when businesses they work for donate to his right-wing party.

For example, the Regina-based Brandt Group of Companies is the largest privately held company in Saskatchewan with revenues approaching one billion dollars. It is owned by Gavin Semple and employs over 1,200 people.

According to annual returns filed by the Saskatchewan Party the Semple family and Brandt companies contributed over $204,000 to the party from 1999 to 2007. During the 2007 election donations totaling $3,900 went to the campaigns of Warren Michelson, Don Saelhof, Laura Ross and Christine Tell.

On Feb. 29, the Wall government appointed Semple as the deputy chair and business representative of the new Enterprise Saskatchewan Board of Directors. One of the group’s that nominated Semple was the Saskatchewan Chamber of Commerce where he was once a board member.

Dave Dutchak is the Chamber’s immediate past president. He is the president and CEO of M.D. Ambulance Care Ltd. in Saskatoon. M.D. Ambulance donated $1,255.28 to the party in 2007 while Duthchak’s M.P.D. Holdings Ltd. contributed $12,600, with $3,500 going to Saskatoon Southeast candidate Don Morgan’s campaign.

Holly Hetherington is the Chamber’s 1st Vice President. She is also president of Regina-based Executive Source Inc. which donated $14,629 to party in 2007, with $8,000 going to at least four candidates: Ken Krawetz, Wayne Elhard, Ken Cheveldayoff and Brad Wall.

The Chamber is a staunch supporter of the Saskatchewan Party government’s two pieces of anti-labour legislation which contains much of what the lobby group had been demanding over the years. It seems to be a case of friends helping friends.

Leader-Post political columnist Murray Mandryk took Wall to task saying a simple solution to the Saskatchewan Party government’s concerns over the undue influence union donations are having on the NDP would be to “ban donations from all unions and corporations.”

Mandryk called the government’s attack “cheap hypocrisy and cheesy sanctimony” and said “the problem with the Saskatchewan Party’s simplistic sanctimony over the NDP being in the pockets of the unions is that it sets it off on a rocky path that ends at a cliff.”

“After all, if labour money can buy off the NDP, why wouldn't we assume that the Saskatchewan Party’s $668,016 in corporate donations [in 2006] has influenced its policies? Wouldn’t we also assume that the tens of thousands of dollars the Saskatchewan Party has received over the years from implement manufacturers (who demanded changes to the union certification laws) or from former media baron Conrad Black (who loved to crush unions) is the driving force behind Bills 5 and 6?

On May 1, following the release of its 2007 financial statement, Saskatchewan Party executive director Bob Mason made a comment equally as dumb as Wall’s saying the $3 million in corporate donations — about 62 per cent of total contributions — that the party raked in doesn’t make them beholden to the businesses that gave it.

So during all the fundraising junkets to Alberta and private meetings with oil and gas companies and lobby groups that the party has conducted over the last ten years the public is supposed to believe that no promises of any kind were made?

Back in Sept. 2004, on one of his many forays to Calgary, Wall, as leader of the opposition, met with energy companies, the Canadian Association of Petroleum Producers and Saskatchewan expatriates to discuss his new economic plan The Promise of Saskatchewan.

In the article Wall defends Alberta trip as economic opportunity (Leader-Post, Sept. 25, 2004) Wall said the energy sector has a list of what it believes are barriers to growth in Saskatchewan. Those include the province’s capital tax and body of regulations.

Wall said his plan for Enterprise Saskatchewan -- an economic development agency at an arms-length from government -- would create a permanent system within government that would identify those barriers to growth and allow the government to quickly act on them if it so chooses.

In a Jan. 31, 2006, report to Ted Mitchell, the then CEO of Saskatoon REDA, Wall expanded on those plans discussing a recent trip he made with a group of Saskatchewan Party MLA’s to Fort McMurray, Alberta. The group included Deputy Leader Ken Krawetz and MLA’s Lyle Stewart, Wayne Elhard and Mike Chisholm.

“We wanted to determine the potential for Saskatchewan to benefit economically from the $100 billion mega-project that the oil sands development presents, and we wanted a first-hand look at the project, the community and the region. Additionally, we wanted to investigate the potential for oil sands development on the Saskatchewan side of the border,” said Wall.

“Should the formation [on the Saskatchewan side of the border] prove commercially viable for development, the Saskatchewan government should proactively be looking at ways to encourage investment with consideration of royalty structures, energy requirements and infrastructure demands. Companies interested in any Saskatchewan oil sand development will also be considering whether the tax regime, labor environment and economic stability of the province will make an investment worthwhile over the long term and the provincial government must move to ensure Saskatchewan is competitive.”

Wall noted that “The foundation of the Saskatchewan Party’s Economic Plan, EnterpriseSaskatchewan, is designed to be the catalyst that ensures economic opportunity can be created and realized in our province. It will be the body that ensures a Saskatchewan Party government would not only be removing barriers for Saskatchewan businesses and individuals to take advantage of supplying the Fort McMurray market, but would be proactively and aggressively networking with that market to create even more opportunities.”

In looking at the areas where the new Saskatchewan Party government has been focusing its attention during its first six months in office it appears Wall & Co. are diligently working on delivering what the energy sector in Alberta has been asking for.

No where has Alberta’s influence been more apparent than on the issue of royalty rates.

In his column Avoiding a royalty pain (Leader-Post, Nov. 17, 2007)Leader-Post financial editor Bruce Johnstone said “Premier-designate Brad Wall has stated several times that reviewing oil and gas royalties will be one of the first jobs of EnterpriseSaskatchewan, his economic development uber-agency.

“Let’s make sure our royalties and our regulatory regime make us competitive, not just with conventional oil and gas, but non- conventional oil and gas (in Alberta),” Wall said during the election campaign. “And that’s a review we’d want to conduct immediately through EnterpriseSaskatchewan.””

Energy and Resources Minister Bill Boyd backed that up in a scrum following the cabinet swearing in ceremony on Nov. 12, 2007: “The Premier said through the election campaign that he would be looking at asking EnterpriseSaskatchewan at an early opportunity to review those rates. I think it would be a prudent thing to do and we’ll be looking to deal with that in a very short period of time.”

“Certainly, we are doing a good job right now and we want that to continue,” Boyd said in an interview.

“We’re not in a position where we think the oil royalty structure needs to be changed.”

In Jan. 2008, on the eve of a two day visit to Calgary to pimp Saskatchewan’s resources to investment audiences and oil and gas industry leaders, Premier Wall torpedoed Enterprise Saskatchewan’s credibility as an independent agency saying the Saskatchewan Party government is “simply not interested” in increasing royalties. However, the new economic development agency being formed…may want to look at the royalty structures in place, Wall said.

In his speech to the Calgary Petroleum Club on Jan. 21, 2008, Wall said bluntly that “The new government in the province of Saskatchewan will not be increasing royalties in the province of Saskatchewan.”

As for EnterpriseSaskatchewan, Wall drilled another nail into the fledgling agency’s coffin saying: “We want to review both the royalty and the regulatory structures we have in place, not just by the way in oil and gas, but in regard to potash and other resources that we’re looking at.

We want EnterpriseSaskatchewan’s sector team, which will involve industry by the way, to do this review for the purposes of trying to be more competitive…That will be the direction that we give to EnterpriseSaskatchewan.”

At a press conference on Apr. 10, 2008, came the coup de grace when Boyd said that the Saskatchewan government will not consider hiking royalty rates for at least 12 years.

The CBC News reported that “An independent report found Albertans weren’t getting enough for their natural resources. Alberta Premier Ed Stelmach later announced royalties would go up, prompting oil and gas companies to say they were cutting back their activities in the province.

“There will be no similar study in Saskatchewan, Boyd said. A Saskatchewan Party government won’t consider the matter for at least three or four four-year terms, he said.

“Boyd indicated he and Premier Brad Wall are on the same page about royalties.

It’s hard to dispute what was happening and why but that’s exactly what Energy and Resources Minister Bill Boyd seemed to be doing at committee meetings.

During debate of the Ministry of Energy and Resources 2008-09 budget at the Apr. 10 meeting of the legislature’s standing committee on the economy NDP MLA Len Taylor asked Minister Boyd about his comments following the 2007 election “that the royalty rates in Saskatchewan should be reviewed, and it should be referred to Enterprise Saskatchewan for that review to take place.”

Boyd claimed he didn’t remember and seemed to blame the media for his troubles: “I would be interested in where you got that information. I don’t recall saying anything of the kind.”

“Sometimes media reports are a little bit misleading as I’m sure the member would know, and sometimes taken out of context, but I think if there are any kind of media reports, that would be something I’d be interested in.”

Boyd’s responses make it pretty clear that the Saskatchewan Party was in close contact with Alberta’s energy sector throughout the election period:

“During the election campaign, we made it, I think, abundantly clear that we felt that the royalty structures were appropriate. We had the unfortunate experience of receiving reports out of Alberta, very erroneous reports out of Alberta from industry players that there was a very incorrect interpretation of where we wanted to go with respect to royalties. We have advised that association that that was not where we wanted to go, and we made that very clear during the election campaign to industry players that that was not what EnterpriseSaskatchewan would be embarking upon.

“We were certainly dismayed to find that that view was continually being presented. We took every step we could to address that concern. We were certainly concerned that this may be directed as a campaign waged against us in a political fashion, and we were certainly, as I say, took steps to address that as a consideration during the election campaign. So any kind of reports that were out there were erroneous and not a direction that we wanted to move. Shortly after the election, we made those continued representations to the industry and to industry associations. I think they got the message loud and clear that that wasn’t something that was correct, that it was being, I think as I say, waged on a political level that we were certainly not supportive of. So that’s the clear direction that we moved in that area.”

Boyd said his party “took every step” to address the concerns and the alleged campaign of misinformation that was being waged against them, but a search of StarPhoenix and Leader-Post for stories to support the minister’s claim that they pulled out all the stops to set the record straight turned up empty.

Most damning is the fact that there appears to be no mention of the issue in the Saskatchewan Party news release archive. If the party were that interested in setting the record straight during the election one would think they’d have tried harder to get the message out.

The Saskatchewan Party seemed to be far more interested in keeping the oil barons in Alberta happy and informed than it did the people of Saskatchewan.

Under the heading “New Saskatchewan Government rolls out welcome mat for petroleum industry” the lobby group said it hosted a meeting in late January in Calgary with Energy Minister Bill Boyd, his top department staff, Glenn Veikle, Acting Deputy Minister and Trevor Dark, Assistant Deputy Minister, Petroleum & Natural Gas, and Bill Cooper, Chief of Staff.

Boyd reassured SEPAC board members and Saskatchewan operators that the new government was based on a ‘pro business’ philosophy and planned to remain very competitive with Alberta and that included no plans to raise royalty rates.

Boyd indicated that Saskatchewan had no plans to introduce emissions regulations and was waiting to see what the federal government would propose.

“SEPAC urged the Saskatchewan Government to play a prominent role in any public debate over the pros and cons of development. Otherwise, antidevelopment activist groups may take centre stage,” states the newsletter. Apparently SEPAC isn’t concerned if pro-development forces seize the agenda though.

SEPAC executive director Gary Leach said in his report that his organization was “planning a petroleum industry day in Regina late March and will co-host a dinner for the new Premier Brad Wall and his cabinet. SEPAC will be joined by CAPP, PSAC and CAODC.” Yes, one big happy family, indeed. And the Saskatchewan Party claims it is beholden to no one.

At the Apr. 29 meeting of the standing committee on the economy Minister Boyd’s comments shed further light on the close relationship between the Saskatchewan Party and the Alberta oil patch.

“Industry has been pretty forthcoming with us, frankly. I just finished, along with a number of other members of executive government, sitting down with . . . Well I don’t suppose it serves any purpose to name them, but a significant, a very, very significant, I think they’d be probably the third or fourth largest energy producing company in Saskatchewan, discussions with them this morning where they brought forward some of their concerns about, you know, the various areas about doing business in Saskatchewan, and how in an advisory capacity they might be able to offer some suggestions how we can streamline regulation to help and assist in terms of their business,” said Boyd.

“It doesn’t mean we’re going to accept them or anything else like that, but this is the to and fro that happens, and we’re seeing this happen on a frequent basis where companies bring forward their ideas.”

(It should be pointed out that the Enterprise Saskatchewan Act is very clear to state that the agency’s role is “to ensure that: taxes are competitive with other jurisdictions; barriers to economic growth are reduced and removed; and labour laws are balanced and fair to both employers and unions.” This is precisely what Alberta’s energy sector have been waiting for.)

In his speech to the FirstEnergy East Coast Canadian Energy Conference in New York City on Mar. 13, Premier Wall confirmed as much when he said “We want to make sure we have the right regulatory regime” and “we’re going to have big ears when it comes to industry input to make sure that we get it right.”

Make no mistake; the Wall government intends to deliver whatever the energy sector wants.

At the Apr. 29 committee meeting it was also clear as to why the government flip-flopped on its decision to review royalty rates and refused to consider the matter for at least “three or four terms.”

Minister Boyd pointed out that industry is coming forward “looking at resource development in Saskatchewan, investing hundreds of millions, and in fact billions of dollars in our province.”

“And I think the investor confidence that is needed to look at the types of massive investments…there has to be an investor confidence that they understand the rules. They understand that this royalty structure is going to be in place for some period of time.”

“[I]f you were a major oil company or a potash company or a resource company of some sort, just take any one of them for our purposes of this discussion, and you’re looking at a 2 or $3 billion investment in an expansion of a potash mine… And when you talk to those resource companies, they’re not talking about looking at the impact that it has on their investment for a year, or two or three or anything like that. They’re looking . . . These are financed over long, long periods of time.

“And so they want some certainty, or at least the level of certainty that we as governments can provide them in terms of where we want to take direction, where we want to move, what direction we want to go. So before we would ever want to engage in that kind of discussion, we would want to sit down with the resource companies, and frankly with the people of Saskatchewan I suppose, and ask some very basic questions. Are we moving in the right direction in our province in terms of the resource regime? I think many objective observers would say, yes.”

So there we have it. The decision to postpone a royalty rate review for more than a decade was made because the energy sector wanted “certainty,” which, in other words means a guarantee or promise that nothing would change for a long time, otherwise the big investments might not be forthcoming.

Furthermore, the Wall government has yet to sit down “with the people of Saskatchewan” to discuss the issue of oil and gas royalties. It seems to have no intention of doing that.

So why would the Saskatchewan Party do this? Well, they’ve got over a million good reasons.

According to Saskatchewan Party financial records filed annually with Elections Saskatchewan in the nine year span from 1999 to 2007 the party raked in more than $1-million in donations from the energy industry.

The election years of 2003 and 2007 saw the biggest contributions with $263,944.53 and $254,119.83 respectively.

(The 2007 total may not include in its entirety the approximate $41,250 that Saskatchewan Party candidates received from the energy industry in campaign contributions during the 2007 provincial election.)

1 Comments:

Boy thats a great article. It really puts things in perspective. I also like the factual account. Mr. Wall on the other hand just made a open ended insinuation without supporting data. Larry thank you for posting this great article and thank you to its creator for putting it together.